Major Chinese blockchain trade finance platform launches

On December 29th the China Banking Association (CBA) launched the “China Trade Finance Inter-bank Trading Blockchain Platform” which was planned by the Association. The platform aims to enhance efficiency by standardizing and digitizing transaction information between banks. ICBC and China Merchants Bank verified the first inter-bank domestic Letter of Credit on the distributed ledger (DLT).

Additionally, other banks involved in the project include The United Nations Development Bank, Bank of China (BOC), China CITIC Bank and China Minsheng Bank. Several fintech companies have contributed to the platform.

The CBA emphasized that the aim is not to change the individual bank processes but to enable convenient inter-bank transactions using digital data. It believes that with CBA’s involvement there is competitive neutrality.

As with most trade finance blockchains, the digitized paperwork including invoices and other trade documents are shared between appropriate parties on a need-to-know basis, thereby protecting privacy and competitive interests.

Once the platform is more established in 2019, the CBA has plans for expansion which include extending access to most small and medium-sized banks and adding different types of trade finance products. The CBA also intends to cooperate with tax and customs departments.

Several Chinese blockchain trade finance initiatives

This has the potential to be the largest trade finance blockchain consortium in China.

A few months ago three of the banks participating in this project executed transactions on a blockchain forfeiting trading platform. The banks were Bank of China, Minsheng Bank and CITC. It’s unclear whether their work is incorporated in the CBA platform, but it seems possible.

In October Ping An’s OneConnect launched the “One Enterprise Chain” supply chain finance platform. Additionally, OneConnect is the technology partner for the Hong Kong Monetary Authority (HKMA) platform eTradeConnect which went live at the end of October.

In February Hanson Wade is running the Blockchain for Global Trade Finance conference in London. A 10% discount is available with this code: BGTF-LI10. We’ve found Hanson Wade events have strong speakers, hardly any sponsor promotional content, and provide excellent networking opportunities.

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